EXCEPTIONAL QUALITY DIAMONDS Corporate Presentation Q4 2018 - - PowerPoint PPT Presentation

PRODUCING EXCEPTIONAL QUALITY DIAMONDS

Corporate Presentation Q4 2018

DISCLAIMER

The information contained in these slides has been prepared by BlueRock Diamonds plc (the “Company”). This Presentation is being made for information purposes only and does not constitute an offer or invitation for the sale or purchase of securities or any of the assets described in it nor shall they nor any part of them form the basis of or be relied on in connection with, or act as any inducement to enter into, any contract or commitment whatsoever or otherwise engage in any investment activity (including within the meaning specified in section 21 of the Financial Services and Markets Act 2000). The information in this Presentation does not purport to be comprehensive and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by the Company or any of its officers, employees, agents or advisers as to, or in relation to, the accuracy or completeness of this Presentation, and any such liability is expressly disclaimed. In particular, but without prejudice to the generality of the foregoing, no representation or warranty is given as to the achievement or reasonableness of any future projections, management estimates or prospects contained in this Presentation. Such forward- looking statements, estimates and forecasts reflect various assumptions made by the management of the Company and their current beliefs, which may or may not prove to be correct. A number of factors could cause actual results to differ materially from the potential results discussed in such forward-looking statements, estimates and forecasts including: changes in general economic and market conditions, changes in the regulatory environment, business and operational risks and other risk factors. Past performance is not a guide to future performance. The Presentation is not a prospectus nor has it been approved by the London Stock Exchange plc or by any authority which could be a competent authority for the purposes of the Prospectus Directive (Directive 2003/71/EC). This Presentation has not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000. The information contained in this Presentation is subject to change, completion or amendment without notice. However, the Company gives no undertaking to provide the recipient with access to any additional information, or to update this Presentation

• r any additional information, or to correct any inaccuracies in it or any omissions from it which may become apparent.

Recipients of this Presentation in jurisdictions outside the UK should inform themselves about and observe any applicable legal

• requirements. This Presentation does not constitute an offer to sell or an invitation to purchase securities in any jurisdiction.

Corporate Presentation Q4 2018

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Corporate Presentation Q4 2018

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INTRODUCTION

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AIM listed diamond producer which operates the Kareevlei Diamond Mine –

• ne of the top 10 highest value per carat

diamond mines in the world High calibre local team with years of experience gained at De Beers and Petra Diamonds recently strengthened by newly appointed Chairman Michael Houston Total material processed 400,000 tonnes, carats recovered 11,000 Average stone size of 0.35c per stone and average value

• f

US$355/c; two largest diamonds of 11.7c and 10.58c

Cullinan Exploration (South Africa) Finsch Koffiefontein Kimberley KAREEVLEI

AT A GLANCE

PRODUCING EXCEPTIONAL QUALITY, HIGH VALUE DIAMONDS

Plans to significantly increase production in 2019 with further growth expected in 2020

KAREEVLEI IN NUMBERS

Mining licence covers

3,000 hectares

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Discovered by De Beers in

1991 120km NW

• f Kimberley

x5 known kimberlite

diamondiferous pipes

8 million tonnes

(combined inferred resource

• f pipe KV1, KV2 and KV3)

6.3cpht – inferred grade of KV

KV1

4.5cpht – inferred grade of KV

KV2

3.7cpht – inferred grade of KV

KV3 Open pit mining

up to 100m below surface

50 people

employed at mine-site

75,000 tonnes of ore put

through plant in H1 2018 (81% increase on H1’17)

200,000 tonnes FY 2018

production target

400,000 tonnes run rate by YE 2019

US$10,091/ct

highest valuation to date for 7.76 carat diamond sold for US$78k Average value per carat

• f c.US$334 –

ranking top 10 kimberlite mines in the world

THE RESOURCE

▪ To date, 4.3% of the in situ tonnage resource has been mined ▪ Currently mining KV2 and KV1 ▪ Ongoing evaluation work on KV5 ▪ Developing plans to start mining the higher grade section of KV3 within the mid term mine plan ▪ Potential inground value of circa US$120 million

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Pipe Volume (m3) Tonnes Carats Grade (cpht) K1 K1 632,000 1,594,000 101,000 6.3 K2 K2 947,000 2,461,000 111,000 4.5 K3 K3 1,581,000 3,929,000 147,000 3.7 Total 3,160,000 7,984,000 359,000

INFERRED RESOURCE 2013

INFERRED RESOURCE FOR KV1, KV2 AND KV3 OF 7,984,000 TONNES AND 359,000 CARATS

THE KAREEVLEI MINE BIRD’S EYE VIEW

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KV5 1.5 Km

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KAREEVLEI DIAMOND MINE

GRADE (CPHT OF KIMBERLITE)

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▪ Of total material mined to-date 80% of ore has been extracted from between surface and 20m below. Grades from this diluted area run between 0 and 3 cpht ▪ Less than 20% of material processed has been at levels below 20m from surface. Grades from this area run up to 6.3 cpht ▪ When mining undiluted kimberlite (typically below 20m) grades are expected to average at pit grade (4.5 cpht KV2 and 6.3 cpht KV1) ▪ Assuming 400,000 tonnes of kimberlite processed per year (our YE 2019 run rate target) the variation in grade has the following effect (assuming our historic valuation of US$355/carat) on revenues:

KV2 - Section 4 KV2 - Section 8

0 – 3 cpht 4 – 6 cpht Already mined Grade (cpht) US$ millions 2 2.8 3 4.3 4 5.7 5 7.1

Costs remain unchanged irrespective of grade (Grade measured by cpht is the weight of diamonds (carats) found in 100 tonnes of kimberlite)

OPERATIONS TO DATE: MINING KV2

▪ Mined 380,000 tonnes to date

▪ 100,000 very low grade 0- 10 m from surface. <1 cpht ▪ 230,000 calcretised kimberlite. 10 – 20m from surface 2 – 3 cpht ▪ 50,000 undiluted kimberlite. 20 – 30m from

• surface. 4 – 6 cpht

▪ Average grade assuming zero grade in the 0- 10m level is 3.5 cpht ▪ Expect future mining to be in +4 cpht ▪ Grade so far varies between 1.1 cpht to 6.3 cpht

▪ This variation is expected whilst mining the near surface section ▪ Average grade increases when mining undiluted kimberlite at the sub 20m level

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DRIVE TO OPEN UP SECOND PIT TO PROVIDE FLEXIBILITY AND DE-RISK SUPPLY OF ORE

▪ Commenced stripping in April 2018 ▪ 160,000 tonnes of waste removed ▪ 25,000 tonnes kimberlite processed ▪ Inferred resource of 1.59m tonnes

▪ Resource modelled to 50m below surface ▪ Total mineable resource likely to be much greater

▪ Inferred grade of 6.3 cpht, 40% higher than KV2 ▪ 40m from KV2 at closest point which will enable mining both pipes as one pit, saving costs

▪ Near surface mining showing similar results to KV2

▪ 10.58c diamond recovered

▪ Estimated to be worth US$50,000 ▪ Second largest stone by size and estimated value ever mined at Kareevlei ▪ Pleasing that it has come from near surface ground

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OPERATIONS TO DATE: MINING KV1

DRIVE TO OPEN UP SECOND PIT TO PROVIDE FLEXIBILITY AND DE-RISK SUPPLY OF ORE

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▪ Plant availability increased to 475 hours per month leading to significantly increased volume since 2017 ▪ Plant utilisation of 73%

▪ Poor design and layout ▪ Non-standardisation of components

▪ Regular problems with crushing circuit

▪ Need to augment current skill base ▪ Continual improvement necessary

50000 100000 150000 200000 250000 2014 2015 2016 2017 2018 e

Historic Tonnage Processed

OPERATIONS TO DATE: THE PLANT

Phase 1

EVALUATION AND EXECUTING OF DEVELOPMENT PLAN

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PIT EVALUATION ▪ 4 to 5 year mine plan to extract 2m tonnes ore from combined KV1 and KV2 (400,000t per year)

▪ 50m push back allowing mining to 70m below surface ▪ 3.5m tonnes of waste. Strip ratio of 1.75

Phase 2

▪ Flexibility during this period to switch to 70m push back

▪ Strip ration increases ▪ Extends pits by 1 to 2 years

▪ Depending on grade a further push back to 100m is possible

▪ Much higher strip ratio

Phase 3

▪ KV3 ▪ Total mineable resource of 5m tonnes

▪ Total surface area of 5.5 ha

▪ 250m from plant ▪ North segment of specific interest

▪ Geology similar to KV1 and KV2

▪ Inferred grade of North segment

▪ 3.7 cpht

▪ Mining to 70m would provide a further 8 years extra Life of Mine

Phase 2 Phase 1

EVALUATION AND EXECUTING OF DEVELOPMENT PLAN

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▪ Historic average monthly tonnage (2017 and 18) 15,000 tonnes ▪ Evaluation by technical team near complete ▪ Move to 24/7, 7 day a week operation in Q1 2019 increasing availability by 20% ▪ We plan to increase utilisation to between 85%-90% per month by: ▪ Move to a 24/7, 365 day operation ▪ Strengthening our operational team ▪ De-bottlenecking the crushing circuit and improving inventory management

THE PLANT

▪ Once the mining operation is capable of producing a regular feed of >50,000 tonnes of ore per month, higher plant capacity will be incorporated

ILLUSTRATIVE REVENUE AND COST STRUCTURE

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1) Assuming average sale price of USD355 per carat and USD 1 = ZAR 14.5 2) Excluding capitalised waste costs 3) Based on a throughput of 40,000 tonnes 4) Illustrative

▪ Operations expected to be profitable at 40,000 tonnes a month at grades below 2.5 cpht

▪ Long term average grade is 2.6 cpht ▪ Highest grade over 6 cpht

▪ The majority of plant costs are largely fixed leading to lower processing costs as volume increases ▪ Processing cost does not include removal of waste which is capitalised and is equal to US$1.49 a tonne removed ▪ Strip ratio estimated at 4.0 in 2019 reducing to 2.7 in 2020

US US$ 2.5 cpht ht 3 3 cpht ht 4 4 cpht ht 5 5 cpht ht Revenue per processed tonne (1) 8.87 10.65 14.2 17.75 Mining cost (2) 1.79 1.79 1.79 1.79 Plant costs (3) 4.12 4.12 4.12 4.12 Net processing profit (4) 2.96 4.74 8.29 11.84

SUMMARY

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▪ Ramping up production at Kareevlei diamond mine

▪ Plant to be brought up to standard to run 24/7, 365 days a year ▪ Work has already started and will take until Q2 2019 to finalise ▪ Production will continue

▪ Mining operations are being stepped up materially to de-risk operations and to supply a regular feed of undiluted, higher grade kimberlite

APPENDIX

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BOARD OF DIRECTORS

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Paul ul Beck - No Non-Execut utive Dire rector

• Born and went to school in South Africa
• Member of a well known South African mining

family

• Experience in the

real estate and natural resource sectors in the UK, US and South Africa

• Founding Director and Chairman of Firstland Oil

& Gas

• Experience of working with BEE partners

Tim Leslie – No Non-Execut utive Director

• r
• 25 years’ experience in financial markets
• Previously at Paribas, JPMorgan, HSBC and then at

Donaldson Lufkin & Jenrette (“DLJ”)

• In 2003 launched the Moore Credit Fund as Chief

Investment Officer

• Launched James Caird Asset Management LLP in

2008 with AUM of USD3.6bn at launch

• In 2011, founded JCAM investments Ltd to run a

family office and make longer term investments

David id Facey – Finance Dire rector

• 25

years experience

• f

raising finance for companies all over the world

• Partner at SP Angel for 10 years following heading

the international corporate finance team at HSBC and PwC

• Fellow of the Institute of Chartered Accountants

Adam Waugh - Chie ief Executiv ive Of Offic icer

• Previously Head of Sales and Trading at Brewin

Dolphin Plc until 2008

• Previously a Non Executive Director of Atlas

Cloud Ltd, a cloud computer service provider

• Previously Chairman of the Northern Counties

Children's Benevolent Society

Mi Micha hael Ho Houston n – No Non-Execut utive Chairm rman n

Mining veteran with +30 years’ experience in Africa

• Previously worked at Anglo American (Executive

roles), Shanta Gold (CEO), Zimplats Holdings (CEO/COO), Erin Resources (MD), Hana Mining (Non-Executive director)

• Also worked on consultancy basis supporting a

number of companies with various project reviews and due diligence

SPECIALIST DIAMOND TEAM

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Joha han n Mi Milho ho – Mi Mine Ma Manage ger r

• 35 years experience within the mining and diamond

industry

• Previously worked at Petra Diamonds, commodity giant BHP

Billiton PLC and global diamond firm, De Beers

• Joined in June 2016 as mine manager to the Kareevlei mine

Dr Dr Kurt rt Pete tersen – Senio nior r Cons nsult ultant Me Meta tallurgist

• PhD, Metallurgy – Stellenbosch University
• World renowned diamond metallurgist
• 10 years’ experience in the diamond industry
• Highly experienced in the design of diamond plants and
• ptimisation of recovery performance

Jock Robey – Cons nsult ultant t Geologist t

• Fellow of the Geological Society of South Africa
• PHD from the University of Cape Town.
• Worked for De Beers as a kimberlite petrologist

specialising in kimberlite mapping logging and petrology.

• Consults to De Beers, Petra Diamonds and Gem

Diamonds

Wi Will lly Van n Wyk – Director of Kare reevlei Mi Mining ing

• 26 years’ service with De Beers
• BEE Partner at BlueRock Diamonds and Head of Procurement
• In depth expertise in the manufacturing, design and

maintenance of diamond recovery machinery

KEY PERFORMANCE INDICATORS

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Quarter Volume(1) Tender volume (2) Carats (2) cpht (2) US$/carat (2) Q1 2017 9,310 4,780 92 1.92 161 Q2 2017 31,033 27,106 451 1.66 352 Q3 2017 63,163 56,486 1,275 2.26 344 Q4 2017 49,641 49,666 1,567 3.16 391 FY 2017 153,147 138,038 3,385 2.45 362 Q1 2018 38,781 41,115 1,563 3.80 378 Q2 2018 34,247 36,942 875 2.45 305 Q3 2018 63,621 58,565 1,834 3.13 341

Notes 1) Based on calendar quarters. 2) Based on the period between tenders which usually take place in the third or fourth week of each month. There is no tender in December. The total carats produced in FY 2017 was 3,728.

KIMBERLITE PIPE

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GRADES INCREASING AS KIMBERLITE PIPE IS MINED DEEPER

Calcrete No diamonds Calcretised Kimberlite 2.4 CPHT Kimberlite >4.5 CPHT 27m 150 m

Ground Level

1 1

Extracted 6.3 CPHT 80m

KAREEVLEI DIAMONDS

▪ 90% of output is gem quality

▪ Colours range from “D” ▪ High average value achieved without any exceptional diamonds ▪ Very high average stone size for kimberlite diamonds of ~0.35 carats per diamond

▪ Establishing a reputation for superior quality and shape of diamonds amongst international buyers

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VALUE PER CARAT IN THE TOP 10 OF KIMBERLITES IN THE WORLD

BALANCE SHEET

No Note tes ▪ Included in creditors is an amount of £195,000 in respect of claims made by Mr Visser, a former director ▪ Currently, Mr Visser has just commenced

• rdinary course

proceedings which the Company has advised are without merit ▪ Funds equal to more than the claim have already been deposited with the court as security

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As at 30 June 2018 Unaudited £ As at 30 June 2017 Unaudited £ As at 31 December 2017 Audited £ Assets Non

• n-current assets

Prop

• perty, plant and

nd equ quipment 734,829 821,415 830,701 Mining assets 496,632 255,179 352,642 1,231,461 1,076,594 1,183,343 Current assets Inventories 65,848 15,930 103,951 Trade and other receivables 29,737 44,311 6,361 Cash and cash equivalents 244,217 106,347 268,128 399,802 166,588 378,440 Total assets 1,571,263 1,243,182 1,561,783 Equity and liabilities Equity Attributable to Equity Holders of the Parent Share capital 2,023,242 679,096 1,398,242 Sha hare premium 2,901,620 2,656,728 2,811,536 Retained los

• sses

(3,521,204) (2,352,940) (2,579,999) Foreign n exch change reserve (65,578) (279,982) (390,441) 1,338,080 702,902 1,239,338 Non

• n-controlling interest

(1,331,500) (1,071,106) (1,195,696) 6,580 (368,204) 43,642 Liabilities Current liabilities Trade and other payables 393,133 632,757 371,298 Borrow

• wings

25,283

• 34,723

Non

• n-current liabilities

Embedded derivative 70,354 72,451 113,333 Borrow

• wings

870,660 761,531 850,505 Prov

• vision
• ns

205,252 144,647 148,282 1,564,682 1,611,386 1,518,141 Total equity and liabilities 1,571,263 1,243,182 1,561,783

PROFIT & LOSS

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6 mon

• nths

hs ende ded d 30 June une 2018 Una naudit dited £ 6 mon

• nths

hs ende ded d 30 June une 2017 Una naudit dited £ 12 mon

• nths

hs ende ded d 31 Decembe ber 2017 Audit dited £ Revenue ue 555,842 150,551 945,924 Othe her income 782

• 446

Ope peratin ing expe xpenses (1,345,341) (901,660) (2,294,489) Ope peratin ing loss (788,717) (751,109) (1,348,119) Fina nance cha harges (44,953) (30,186) (82,384) Cha hang nge in fa fair ir va valu lue of fina nancia ial l instruments desig ignated d at FVTPL 42,979

• 179,506

Fo Foreig ign n exc xchang nge (los

• ss)

) / gain in (503,240) (85,869) 71,468 Loss befor

• re taxatio

ion n (1,293,931) (867,164) (1,179,529) Taxation ion

• (7,134)

(22,008) Total l loss fo for the perio iod (1,293,931) (874,298) (1,201,537) Othe her Com

• mpr

prehe hens nsiv ive Inc ncom

• me:

Exc xchang nge differenc nces on translating ing for foreig ign operatio ions ns 439,004 70,511 (78,760) Total l com

• mprehensiv

ive loss, net of tax (854,927) (803,787) (1,280,297) Total l com

• mprehensiv

ive loss, net of tax x attribut butable le to: Owne wners of the parent (719,123) (550,067) (901,987) Non

• n-controll
• lling

ng interest (135,804) (253,720) (378,310) (854.927) (803,787) (1,280,297) Earning ings per sha hare – from cont

• ntinu

inuin ing activi ivitie ies Basic ic and nd dilut luted (0.01) (0.01) (0.01)

Corporate Presentation Q4 2018

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BlueRock Diamonds Adam Waugh, CEO awaugh@bluerockdiamonds.co.uk +44 (0) 7711 673817 +27 83 583 8731 SP Angel Corporate Finance LLP (NOMAD and Joint Broker) Stuart Gledhill stuart.gledhill@spangel.co.uk +44 (0)20 3470 0470 BlueRock Diamonds David Facey, FD dfacey@bluerockdiamonds.co.uk +44 (0) 7810 336540 SVS Securities plc (Joint Broker) Tom Curran tom.curran@svssecurities.com +44 (0)20 3700 0100

CONTACTS

St Brides Partners (Financial PR) Lottie Wadham/Juliet Earl +44 (0)20 7236 1177 Turner Pope Investments (Joint Broker) Lewis Jones/Andy Thacker +44 (0)20 3621 4120